Author: World Finance

Ibrahim M Al Alwan on asset management | KSB Capital Group | Video

Posted on by World Finance

KSB Capital Group is one of the largest asset management businesses in the MENA Region, and provides fund management services in a broad range of asset classes. Ibrahim M Al Alwan, CEO of KSB Capital Group, talks about the asset management sector in Saudi Arabia, how its approach to asset management has adapted to new regulations, and his expectations for the future.

World Finance: So tell us about KSB Capital Group, and what makes you different from the competition?

Ibrahim M Al Alwan: From the beginning, we believe that we have to have a niche market. We have to differentiate ourselves compared with our competitors, and to be a leader in new sectors. And after we made a lot of searches in the market, we saw that real estate investment was not so developed, and not well served by the existing players in the market. So, we focused on this area, and we’re now starting to have new products for real estate. And we create real estate investment funds based on the new regulation from the CMA, the capital markets authority in Saudi. So we launched the first cross-ended real estate fund, and it was really successful at that time. And we got good performance in this fund, and this gave us an advantage over our competitors because we have a niche market, and we have new products in the market. Even our competitors didn’t have. And so this adds value for us, and we believe that we are appealing in this sector.

“We launched the first cross-ended real estate fund, and it was really successful”

World Finance: What can you tell us about how your approach to asset management has developed in recent years?

Ibrahim M Al Alwan: In the beginning, we start with a simple product for real estate investment funds. But after we did some funds, after that, we believed that we have to go to the next stage, of having multi-assets, or multi-projects in one fund. Also, we’re starting to increase the term of the fund itself. We’re starting with short-term, but after that we’re starting to be convinced to have funds with more than two, three, five years, which gives us more flexibility regarding the investment activities.

World Finance: We’ve talked about your asset management approach; what can you then tell us about your corporate governance philosophy?

Ibrahim M Al Alwan: Corporate governance for sure is very important. From the beginning of starting the company, we focused on having to apply the corporate governance in a good manner. And because it really helped us in having the balance between all the stakeholders regarding clients, staff, regulators, and also the public. So, to have all these in balance, by applying the corporate governance, it helps us a lot to get the benefit of these relationships.

“With the new regulations, we see the improvement in the practice in the market”

World Finance: You’ve touched on the new regulations; what impact do you think they will have?

Ibrahim M Al Alwan: With the new regulations, we see the improvement in the practice in the market. We see how the investment banks are starting to focus more on giving a good product, focusing on how to mitigate investors about risks. All these really, we noticed that once the new regulation regarding the corporate governance, and even the investment activities which improved the market. However, at the same time, we have obligations. Investment banks, you know, with the new regulations and with the new corporate governance rules, you have to hire more people to have in the risk management and the corporate governance, as activities. So, all these need to spend and give more time to comply with the new regulations.

World Finance: Now, looking at the asset management sector in Saudi Arabia at large, how has it changed in recent years, do you think?

Ibrahim M Al Alwan: Recent years, we noticed that we’re starting to see products for individuals. In the past, most of the products in the investment management and the investment side, it’s focused on the family business, and the institutions. Right now we noticed that new products, the competition’s coming to the market, so the market’s developed, and we notice a lot of asset under management right now coming from individuals, and even from family offices. They’re starting to be convinced with their local investment banks, to invest with them.

“Right now we are trying to target new markets, we’re targeting also new products, right now especially real estate”

World Finance: And what’s your future outlook, both for the asset management sector in Saudi Arabia, and the strategic vision for KSB?

Ibrahim M Al Alwan: In the beginning we were just focusing on how to improve ourselves, and how we gain the trust from investors and clients. Right now we are trying to target new markets, we’re targeting also new products, right now especially real estate. Saudi Arabia will then have a decent amount of real estate investment trusts, so we are focusing on that. We want to be the main player, or the first to introduce for this product to the market in this one area. And the other area regarding the cores: banking also, we focus on the private equity. A lot of investors, they want to have a partnership, to have activities in the private equity, and have some shares of these companies, and offer it to public or to private investors. I think this is the future for the market in Saudi Arabia.

World Finance: Ibrahim, thank you.

Ibrahim M Al Alwan: You’re welcome.

Jose Tudela on insuring Peru | Rimac Seguros | Video

Posted on by World Finance

Today, more than half of Peruvians consider themselves middle class. This growing demographic is driving the economy forward – and particularly the financial industries. Jose Tudela, International Business Manager for Peruvian insurer Rimac Seguros, talks about how the sector is developing in light of this change, and how Rimac Seguros is developing its products to match customer demand.

Arthur Pinheiro Machado on electronic trading in LatAm | Americas Trading Group | Video

Posted on by World Finance

The Americas Trading Group was founded in 2010 as a technology company, specialising in electronic trading in Brazil. Arthur Pinheiro Machado, COO of Americas Trading Group, discusses how ATG filled a critical gap in the trading market in Latin America, explains what is driving the increase in high-speed trading in the region, and introduces about ATS Brazil, a new exchange in the Brazilian market, formed in partnership with the New York Stock Exchange.

World Finance: So tell us more about ATG.

Arthur Pinheiro Machado: Americas Trading Group is a broker-neutral, high performance liquidity centre, which connects brokers and end-users with the key markets in the Americas, such as the US, Brazil, Colombia, Mexico, Chile and Peru.

ATG offers the buy and sell side, full support in electronic trading solutions to the Latin American market. So, we provide an array of products and services to ensure that the clients will have the best order execution and strategic control.

“ATG offers full support in electronic trading solutions to the Latin American market”

World Finance: So what was the key need in the Brazilian marketplace when you started, and how did you go about servicing that need?

Arthur Pinheiro Machado: At the time, Brazil had an underdeveloped market, and the financial community under-utilised electronic trading solutions. So there was a lack of companies specialising in electronic trading solutions. So, considering the experience that our management team has in the brokerage business – we were partner of one of the largest brokers in Brazil, which was sold in 2008 – plus the fact that we were pioneers in applied electronic trading on the Brazilian market, we decided to create ATG to fill this gap. And today we are the largest electronic trade provider in the region.

World Finance: And have you seen a significant increase in high-speed trading activity in Latin America? And if so, where has it come from?

Arthur Pinheiro Machado: Definitely. And ATG’s helping the buy and sell side to access these markets electronically. High-frequency trading currently accounts for 15 percent of trades in Brazil. The main direct market access accounts for more than 50 percent, and part of these numbers represent automation of the trading process. But there are also new players in the market – in fact, most of them are UK and US investors.

“High-frequency trading currently accounts for 15 percent of trades in Brazil”

World Finance: How do you see electronic trading evolving in Brazil over the next few years?

Arthur Pinheiro Machado: The Brazilian Securities Commission, the CVM, has begun reasonable discussion on new regulation for Brazil. And this is very important, and the most important is much of the industry has been making positive statements favouring opening the market, so we are very very confident, and strongly believe that Brazil represents today a huge opportunity for new venues, providers, and vendors. So, we are very optimistic as well.

World Finance: What then does Brazil need to do to move its financial markets forward?

Arthur Pinheiro Machado: Three basic things. First, introduce real competition at the exchange level. Second, make our market regulation friendlier for new-comers; both local and international. And, be supportive of real competition and innovation in long-term trade solutions and products.

World Finance: Provide us with some detail on your partnership with the New York Stock Exchange.

Arthur Pinheiro Machado: Certainly. In June, we submitted a request for a new stock exchange called ATS Brasil – Americas Trading System Brasil. NYSE holds 20 percent of the new venture, and ATG holds 80 percent. We are prepared to launch the exchange as soon as we have the licence, and we expect that should happen some time next year.

“We have only 360 listed companies. This is nothing, considering the size of our economy”

World Finance: And what were the reasons, the factors, that inspired this venture?

Arthur Pinheiro Machado: The fact that the local market does not truly represent the Brazilian economy. We have a huge opportunity to fix that. Only 10 stocks account for more than 50 percent of all trades in Brazil. On the futures side, five contracts – only five contracts! – account for more than 90 percent of all trades.

We have only 360 listed companies. This is nothing, considering the size of our economy. We are the sixth economy in the world, so there is a huge opportunity, and we are there to take it.

World Finance: What will be the initial focus of the exchange, and how do you see it expanding in the future?

Arthur Pinheiro Machado: At first we concentrated on stocks. We have a strong background in this area, and we know how to create liquidity. So it is the obvious choice. However, futures, derivatives, and even fixed income, are now in our plans down the road.

We’re not afraid to be bold, but we need to take it one step at a time, right? We cannot lose our focus, which is offering a viable solution, a viable option, for investors wanting to efficiently access the Brazilian market.

“If Brazil wants to attract new investors, and have a strong and dynamic market, being connected globally is a must”

World Finance: So is this part of the overall plan to open the Brazilian markets to the rest of the world?

Arthur Pinheiro Machado: We believe that we have to open up the Brazilian market. Brazil – if Brazil wants to attract new investors, and have a strong and dynamic market, being connected globally is a must. And we are the fourth fund in the world, with over $1trn in assets under management, and for Brazilian investors abroad it’s hard. So, it doesn’t make any sense. We have to be cured, we need to be cured of this Peter Pan syndrome and start thinking big.

World Finance: Arthur, thank you.

Arthur Pinheiro Machado: Thank you Nick.

Carlos Hank González on the Gran Museum | Grupo Hermes

Posted on by World Finance

Grupo Hermes was founded in 1977 with the purpose of promoting, developing, and investing in capital infrastructure projects within Mexico. Carlos Hank González, CEO of Grupo Hermes, discusses the Gran Museo del Mundo Maya de Merida: an award-winning, flexible museum space, dedicated to the history and present of the Mayan peoples.

World Finance: Tell us about Grupo Hermes; what kind of projects are you involved with at the moment?

Carlos Hank González: We have different industries that we participate in. For example we’re very focused in the infrastructure business – in not only building, but also the concessions and operating of different businesses.

We also are participating in the automative business; we have also big participation in a steam generation boilers company, which we’re partners with Mitsubishi in Austin. We also have a tourism development project in Cancun, and we participate also in transportation services.

“It was a huge construction. More than 20,000sq m, and we had to do it in under 12 months”

World Finance: Now, the Gran Museum has attracted a lot of positive attention; why do you think this is?

Carlos Hank González: It’s a very interesting project. It’s the first project that has been a PPP project, which is a private and public association project. And it’s very interesting because it’s the first museum in Latin America that has been developed that way. So it took a lot of challenges for sure, but it’s a very exciting thing that we participated in last year and we’re very proud of it.

World Finance: You mentioned the challenges involved; tell us about these and also the other considerations of the project.

Carlos Hank González: Sure. There were many challenges in this project because – as I mentioned – it was the first museum ever built in this type of association. So, first of all we had to convince the government of the benefits that this could have. And it was a big challenge, because this was the first time ever that a project like this has been a concession to a private company, and as you know we still have to manage it for the next 20 years.

But other challenges, for example: the way it was built, it was a huge construction. More than 20,000sq m, and we had to do it in under 12 months. So, there were big challenges, but we’re very proud of what we could achieve.

“The rate that we’re planning to grow, with all the reforms that are going to be passed, we need the infrastructure to go along with that”

World Finance: So how do you envisage the space being used in the long-term?

Carlos Hank González: It’s a very impressive construction, which allows the place to be used in many different ways. Not only as a museum, but for sure as an exhibition centre for the government to show the richness of the state of Yucatan and the city of Medina. We have a big IMAX theatre, which allows us to project a lot of movies, and they have projected a lot of movies, for example, of how the Myans live right now.

And they have also done a lot of big events, where the government has taken a lot of guests, and used it for increasing tourism. And they have a lot of different activities going on at the museum, so we’re very excited about what can be done and achieved in the next years.

World Finance: In the broader context, then, how do you see investment in infrastructure developing in the future?

Carlos Hank González: Very much. President Peña Nieto just announced a big plan to invest around $300bn in Mexico, and we need a lot of infrastructure in Mexico. I think the rate that we’re planning to grow, with all the reforms that are going to be passed, we need the infrastructure to go along with that. So I think these kinds of projects, with the PPP projects in Mexico, is something that will help us and allow us to keep those investment producing and get the growth that we’re looking for in Mexico.

World Finance: Finally, what’s next for Grupo Hermes in terms of projects and the strategic vision?

Carlos Hank González: We’re very excited. We’re very excited because, as I just mentioned, there was a big investment plan announced in Mexico, which is planning to get newer airports, water dams, ports, more highways, and those are all products that we know best, that we have been working on for the last 20 years, and we’re very excited and looking at the new projects to decide which ones we can participate in and be competitive at.

World Finance: Carlos, thank you.

Carlos Hank González: Thank you very much, Nick.

Ahmed Kalej on mining in DRC | Gecamines | Video

Posted on by World Finance

The Democratic Republic of Congo is not the easiest place to do business. But, its state owned mining company Gecamines is experiencing a reawakening of sorts. Ahmed Kalej, CEO of Gecamines, talks about some of the challenges that Gecamines has faced, as well as his role in restoring the former giant to its position as one of the most important mining companies in Africa.

World Finance: First, tell us about some of the challenges that Gecamines has faced in the past.

Ahmed Kalej: Gécamines has overcome many challenges in the past, right up to the recent past. But let us summarise some of them.

First, there is the delay in the research and exploration programme. In normal mining activity, exploration precedes exploitation. But what we find at Gécamines is that there was a significant delay in exploration, which forced Gécamines to exploit while exploration was going on. That’s like flying by instinct.

The second challenge concerns the age of the production unit. The plants are out of date; most of them date from the 60s. And in that state they cause a lot of losses, lots of down-time and ore lost, as a result of the down-time.

The third obstacle – the third challenge – is debt. Gécamines is heavily indebted, which prevents it
from floating finance on the international markets in order to secure funds for its own operations, to restart production.

And the last challenge, but not the least, is the size of the workforce. Gécamines employs more than 11,000 workers for an activity which only requires 4-5,000. There’s therefore a correspondence between the size of the workforce and the level of activity today.

“Why not? It’s an interesting challenge. Yes, there are difficulties, but it’s not impossible.”

World Finance: And what attracted you to the role of CEO at Gecamines?

Ahmed Kalej: I’d say what attracted me was the difficulty. I was born in the region where Gécamines is based, so as a child I saw it in its heyday, and I saw it founder over the course of the years. At the same time I’ve seen other mining companies establish themselves in the area, and they have developed and made money.

When I was asked to take the role I thought, “Why not? It’s an interesting challenge. Yes, there are difficulties, but it’s not impossible.” So, I accepted the challenge.

World Finance: What would you say made your approach to reviving Gecamines different, and more successful?

Ahmed Kalej: First of all, I don’t come from the mining sector. It’s a purely technical undertaking. I trained in finance and worked in the banking sector for a long time. I therefore imagined that the first thing to do was to inform myself.

That’s why, since my arrival, I’ve been engaged in discussions, speaking with the company executives at managerial level, and also with the foremen and those on the factory floor, to try to understand what happened to the company. What made this company, which was so successful, decline to such a level? And that has enabled me to establish a sort of diagnosis, which allows me to delegate, to propose solutions, in order to relaunch production and all its functions.

“A completely restored Gécamines could be a positive influence on the reputation of the Democratic Republic of Congo”

World Finance: As you say, you have a completely different background, so how do you feel your experience informed your approach?

Ahmed Kalej: My past in banking means that I think very analytically, and it has equipped me with rigorous, results-focused management principles. And this background has allowed me to tackle the great challenge at the level of the business, has allowed me to approach it with a style that goes straight to the problem, and to find the solutions that are needed in order for us to relaunch production.

World Finance: So how do you see the future of Gecamines, and what are some of your key objectives?

Ahmed Kalej: Of course I see a successful future for Geecamines, otherwise I wouldn’t have been accepted as CEO. The main objectives are to rapidly grow production, and, according to our strategic development plan, we should reach 100,000 tonnes of copper a year by 2015, and go beyond that, to reach 200,000 tonnes of copper a year in the medium term.

And the other key objective is to maximise profits while minimising exploitation costs, and increasing profit margins in order to be able to deliver shareholder dividends.

“We should reach 100,000 tonnes of copper a year by 2015”

World Finance: And finally, what impact do you think a fully restored Gecamines would have on the reputation of the Democratic Republic of Congo?

Ahmed Kalej: A completely rehabilitated and restored Gécamines could be a positive influence on the reputation of the Democratic Republic of Congo. In the sense that it will allow the country to regain its position among the world-leading producers of copper.

By increasing its production like this, it will also raise revenues and increase its contribution to the country’s growth rate. And if the growth rate increases, it will also allow the country to be classed among the great countries, even among the emerging economies. Why not? And that is something positive for the country’s reputation.

World Finance: Mr Kalej, thank you very much for your time.

Ahmed Kalej: Thnk you very much.

Yannick Archambault on client education | BMO Harris Private Banking | Video

Posted on by World Finance

BMO Harris Private Bank has been offering high-net-worth families a full range of financial solutions for over 100 years. Yannick Archambault, COO of BMO Harris Private Banking, discusses the bank’s core values of honesty and fair dealing, and its latest programmes helping to better educate and serve its customers.

World Finance: Introduce us to BMO Harris Private Banking, and the services you offer to your clients.

Yannick Archambault: At BMO Harris Private Banking, we recognise that while wealth creates a lot of opportunities and advantages, it also brings additional responsibilities, complexities, and often some challenges. What we do at BMO Harris Private Banking, is work with families to simplify their wealth affair and their wealth plans. Every family that we work with has access to what we call a client strategy team. At the core of that team is a dedicated private banker, investment counsellor, trust offer, and also a private wealth consultant.

In addition to these four specialists, we can also bring in what we call a private wealth advisor, or one of the specialised planners to bring wealth planning to the next level.

Over the years, we’ve continued to develop and evolve the platform. In addition to credit solutions, investment solutions, and trust and SA solutions, we now have been offering I would say for the last year or two in some cases, family governance, business succession planning, philanthropy, tax consulting. We’re also looking at business planning and business succession planning, estate planning. And we also include insurance planning.

“The two key things for us are to continue to be thought leaders, and to continue to challenge the status quo”

World Finance: And private banking is a relatively competitive market, so how does BMO differentiate itself?

Yannick Archambault: Yeah, we believe that there’s two key things that we need to focus on to be able to differentiate ourselves. The first one would be challenging the status quo. And the second one would be thought leadership.

When we look at the business that we’re in, there’s three key areas that we like to focus on to understand better the macro trends. And also to gain a better understanding into the goals and objectives of our clients.

The first one would be complexity, the second one would be gaining a better understanding of demographics and the changes of demographics, and the third one would be globalisation.

So if we take the first theme of complexity. There is an abundance of choice, an abundance of information, and abundance also of providers and solutions. So working with the families to demystify, to simplify, that complexity, would be one of the key themes.

Second one would be the changing demographics. So, for us to have a better understanding and a very good understanding of our clients. And our target segment. You know, understanding the evolution of the demographics.

The third theme would be globalisation. More and more clients have access to financial assets that are cross-border. They also have personal affairs that are cross-border. So it’s helping and working with clients to have access to diversification by market, by currency, by jurisdiction, and also by asset class.

World Finance: You’ve talked in the past about your commitment to educating clients on wealth management – have there been any new additions to the programmes that you offer?

Yannick Archambault: So, seven years ago we launched financial fluency and financial focus. Which was focused on demystifying and simplifying credit investment and basic planning solutions.

In the last year or two we’ve continued to develop and increase the offering in terms of education series. We’ve added the art series. And that’s basically a workshop that enables and helps clients better understand the business of collecting art collections and managing art collections, and the auction process that goes with that.

The second addition in terms of seminars would be the creating good will. And that’s working with families in terms of will planning, identifying key values with regards to money. Also talking to them about legacy. And what that might represent for them.

And then the third one would be our product Wealth Group Education seminars, which is catered more to the ultra-high-net-worth. So, working with those families in terms of workshops, bringing in some guest speakers. And we attempt to look at family governance, managing a family business, and the multi-dimensions that are required there.

“We have focused on demystifying and simplifying credit investment and basic planning solutions”

World Finance: So tell us about the other recent developments at BMO.

Yannick Archambault: Sure! And there’s probably like, five, that I’d like to highlight. One would be… call it the creation, or evolution, of what we call BMO Global Private Banking. And that’s essentially a stronger partnership and collaboration between Canada, the US, and Asia, where we’re looking to leverage the capabilities, leverage the knowledge and leverage the ideas that would be found in each of the markets.

The second one would be the new cane strategy. So, working with BMO China, and some of our other partners over in Asia, identifying and working with families that have an intent on moving to Canada, or to the US. And helping them better plan the move.

The third one would be linked to open architecture. So continuing to work with BMO Global Asset Management, to look for top class money managers.

And the fourth one would be client segmentation. I mentioned the client strategy teams a little earlier on, so it’s taking the client strategy teams and adapting them to different client segments, creating client strategy teams that can go a mile deep in terms of the understanding of each of those segments.

And then finally the last one would be continuing to leverage the partnership that we have within BMO Financial Group, to leverage the entire capabilities. So, working closely with our partners and commercial, corporate finance, call it, capital markets, and also asset management. And that’s to be able to provide clients with the entire capabilities of BMO Financial Group.

World Finance: And finally, give us your outlook for the private banking division at BMO.

Yannick Archambault: I think the outlook is very positive. I think we’ve built a very strong business model, we’ve also built a strong brand, and we have a very strong reputation. I also look at the work we’ve done on our client experience programme, client surveys on a yearly basis come out very favourably, so very strong from that perspective. And also from the employee experience. Every year we survey our employees to make sure that the environment is a challenging environment, and also an interesting and fun environment, and the surveys come out positive.

So if you look at the work that we’ve been doing, I think the two key things for us, for the future, are to continue to be thought leaders, and to continue to challenge the status quo.

World Finance: Yannick, thank you.

Yannick Archambault: Thank you.

Carlos Hank González on Mexico | Banco Interacciones

Posted on by World Finance

Mexico President Enrique Peña Nieto’s ‘Pacto por Mexico’ means the country should see faster and easier reforms in the next few years that it has for decades. Carlos Hank González, President of Banco Interacciones, outlines the three key reforms that have been made, the impact they have had on the economy, and the business case for the $300bn programme of infrastructure spending that has been promised over the next six years.

World Finance: Tell us about the reforms, and how they’ve affected Mexico’s economic performance.

Carlos Hank González: The recent reforms… well, first of all, let me tell you that the reforms are now creating a lot of excitement in Mexico, because they can really make a big break through for the country.

The recent reforms that have been made already, two of them are the most important.

First, the education reform, which can be a big change for Mexico in the long run. We needed that for a long time, and I think it was a very good choice by President Peña, so I think it will be a big game changer in the long run.

And the second reform which will have results very fast is the banking reform. And it’s mainly focused into having better credits, better loans for the people, for the businesses, and at cheaper prices. And as you know, if banks are lending, it means growth for the country. So we’re expecting big things, and we should also have other reforms passed during the year, which should really set a bigger growth rate for Mexico.

“The Mexican banking industry is still growing at a very aggressive rate. We’re ready for Basel III”

World Finance: And if we look at the banking reform in some more detail, what is this hoping to achieve?

Carlos Hank González: What it’s hoping to achieve is what I was telling you, it’s to achieve more loans at a cheaper price. And what the government is doing is, through the government, what they’re trying or proposing to is to give guarantees to the banks in order for the banks to make safer loans.

And we have to make those credits cheaper. So, the result, what we’re looking for, is for the businesses, for the people, to be able to get better choices of loans, better choices of credits, and at better prices.

World Finance: So what other challenges are Mexico’s banks facing today?

Carlos Hank González: We’re facing many challenges – as you know, the Mexican banking industry is still growing at a very aggressive rate. We have very safe banks; for example we’re ready to go into Basel III, we have very good balance sheets at most of the banks, and I think the biggest challenges are that we need to give more access to the people and to our services.

Not more than 10 percent of our population has access to banking services, so we don’t only face a lot of challenges, but we face a lot of opportunities in order for the banks to keep growing in Mexico.

“Infrastructure is the key for a country to stay competitive. $300bn in investments will do a lot.”

World Finance: The president has also announced a $300bn programme of infrastructure investment over the next six years, so why is this needed?

Carlos Hank González: Very important. I think infrastructure is the key for a country to stay competitive. If we don’t have the infrastructure: airports, ports, highways, dams, whatever; if we don’t have the infrastructure in order to compete with the world’s countries, we’re going to stay behind. And that’s something that’s been happening to Mexico.

If we look at Mexico: the position that it holds in the world economically, we’re way far behind in the position that we hold in infrastructure investments. So, I think the announcement that the president made is something that has us very excited in Mexico. $300bn in investments will do a lot. He talked about airports, about new ports, about getting better highways, and that should make Mexico more competitive for sure.

World Finance: Finally, Interacciones has a history of working with the government on these projects, so you are expecting the phone call pretty soon, I guess?

Carlos Hank González: We have a lot of experience in infrastructure, that’s for sure. This year Banco Interacciones is 20 years old, and one of our main niches that we have specialised in since the first year was infrastructure. We have developed a very specific strategy in financing and investing in infrastructure projects as I mentioned, all types of projects, and mainly the private projects that are partnered with the government.

We did for example, last year, we financed the first PPP project, which is private and government projects, which financed a museum for example. Which is the first time that has been done in Latin America. So, we’re very excited about what the president has announced. We are ready for the challenge, and we’re ready to work with Mexico on that.

World Finance: Carlos, thank you.

Carlos Hank González: Thank you very much Nick, it’s been a pleasure.

Barry McQuain and Kobi Dorenbush on offshore services | Caledonian Group | Video

Posted on by World Finance

Headquartered in the Cayman Islands, with locations around the Americas, Caledonian Group offers a breadth of financial services to both high-net-worth individuals and institutional clients. Barry McQuain and Kobi Dorenbush, joint CEOs of Caledonian Group, discuss the services they offer, the benefits and challenges of operating in the Cayman Islands, and the outlook for offshore financial service centres.

World Finance: Kobi, introduce us to Caledonian Group and the services you offer to your clients.

Kobi Dorenbush: Caledonian was founded in 1970, and over the years it’s grown substantially. Today we’re over 120 employees in four countries around the world. If you look at all the assets that we work with, based on deposit custody, trust and administration, we’re working with about $30bn in assets today.

About two years ago, our partnership group acquired Caledonian Group from its founding family, and since that time we’ve been refocusing the business to four key areas.

The first is fiduciary services, which include incorporations both in the British Virgin Islands and the Cayman Islands, trust services and directorship services. We also provide securities brokerage and custody. We provide welath management services ot our high net-worth clients around the world. But our core business is banking. Caledonian Bank is the only privately-owned Class A bank in the Cayman Islands, that focuses exclusively on high-net-worth individuals, international business and institutional clients.

“The Cayman Islands is the same as any other global financial centre. It’s just our weather is a little bit better”

World Finance: You’re based in the Cayman Islands, so what challenges does this present?

Berry McQuain: Well, I think many jurisdictions have challenges, particularly after the crisis in 2008. All financial centres. Actually, Cayman has quite a few strengths. We’re in the eastern timezone, close to quite a bit of wealth, and quite a bit of business in the US. Geographically we’re an easy plane flight from about 12 other cities on a daily basis. In terms of assets, the Cayman Islands is the fifth-largest financial centre in the world. And that is due primarily to the expertise and the experience that has developed in the Cayman Islands over the last 40 years.

I think perception is one of the challenges that we face, in that, in the Cayman Islands we’re all out with our feet in the sand, doing business in-between surfing and good waves and diving. Which – is true sometimes. But the reality is, we run a global, conservative business. Banking, accounting, financial needs. The same as any other global financial centre. It’s just our weather is a little bit better.

World Finance: Kobi, but there are benefits you’re able to take advantage of as well.

Kobi Dorenbush: Sure, I mean, first of all, it’s very easy to get clients to come and visit us in the Cayman Islands around December, January, February. But really, the Cayman Islands has a number of advantages that we look to. Cayman is well known for its tax neutrality of course, but there’s also the advantage of being regulatory neutral.

What I mean by that is that, the Cayman Islands does not impose any personal or corporate income tax. There’s no capital gains tax, there’s no inheritance tax, there’s no property tax. Also, the Cayman Islands doesn’t impose any significant regulatory hurdles on doing business, both within the Cayman Islands and from the Cayman Islands.

What that means for our clients is that they can come to the Cayman Islands, set up their businesses, and then go forth throughout the rest of the world and engage in international commerce without being hampered or restricted by the regulations or taxes from the Cayman Islands.

“Lawyers, bankers, dealmakers, investment managers, all choose the Cayman Islands because the experience and the expertise is there”

World Finance: And Barry, the Cayman Islands is known as a domicile for hedge funds; tell us about this.

Berry McQuain: That’s right. There are over 10,000 hedge funds which are domiciled in the Cayman Islands, making the Cayman Islands larger than all other jurisdictions combined. The primary reason for this is the availability of a professional body of expertise. These are the lawyers, the bankers, the dealmakers, and the hedge fund investment managers, who have all chosen the Cayman Islands because the experience and the expertise is there.

World Finance: And the captive insurance industry has been particularly successful, why do you think this is?

Berry McQuain: The growth is great. In the past year, the growth is probably in the range of almost 30 percent year over year. The Cayman Islands is the second-largest globally, but the largest in terms of healthcare captives. Last year’s premiums were about $12bn on $88bn of assets, so it’s a sizeable business.

The primary reason for choosing an offshore jurisdiction such as the Cayman Islands has to do with the experts that are available, and the regulatory framework which allows flexibility when guiding and managing a captive.

World Finance: And finally, Kobi, there are questions over the sustainability of offshore financial services centres, so what’s the outlook as you see it?

Kobi Dorenbush: The question of sustainability really comes up largely due to what I think is the popular media presenting a very stylised impression of the Cayman Islands to sell a novel, or to sell tickets to a movie. The truth about the Cayman Islands is that doing business there is very much like doing business anywhere else, with the exception of the good weather and the beach.

In reality, the sustainability of the Cayman Islands is very positive. We’re very bullish on the future of the industry, and the offshore markets generally. We’ve seen a significant increase in business over the last few years. I think that’s largely due to the major economies around the world slowly coming out of recession. And I think that what you can see, or what we expect to see, is that as the onshore markets tend to put more restrictions on doing business, and put up more barriers to doing business, capital will find its way to that place that is more neutral, that place that is more willing to accept investment and they will… more business will find its way to the offshore centres.

World Finance: Kobi, Barry, thank you

Barry McQuain: Thank you.

Kobi Dorenbush: Thank you.

Rohan Courtney on UCG energy | Clean Coal Ltd | Video

Posted on by World Finance

Coal mining is a messy and expensive business to dig out something that we’re simply going to burn. So why bother? Can’t we just burn it where it is? Well, we can: it’s called underground coal gasification (UCG), and it’s not a new idea. But it is the new panacea for Britain’s energy needs. Rohan Courtney from Clean Coal Ltd discusses the technology and economics of underground coal gasification, the potential for UCG reserves in the UK and around the world, and addresses the environmental concerns around the technology.

World Finance: Let’s start if you would with a brief explanation of how the technology works for underground coal gasification.

Rohan Courtney: It’s all done underground. 500m, 1km down, a long way underground. So, from the surface, a long way. So, you’ve got a coal seam, a lovely coal seam. It’s probably surrounded by rock, okay? You drill two wells. The first well is to ignite – everyone gets so frightened about ignite, but you’re talking about converting, you know, by pressure, this coal into gas.

The other well has the synthetic gas coming up the other well. So, what you’re doing is, everything underground. So it’s very simple, a very simple process.

“UCG has the potential to provide energy for hundreds of years”

World Finance: I mentioned that it’s not a new idea, what is it recently that’s made it an economically viable energy solution?

Rohan Courtney: The high cost of oil – oil has increased and increased and increased in terms of the problem that all oil companies have in finding more oil. So therefore they go from the low-hanging fruit to the most difficult.

UCG on the other hand, of course, is quite the opposite. We’re starting this now – even though it’s been around for 100 years – the real activity is now. So actually, what you’re finding is you’re going for the low-hanging fruit. It’s unmineable coal that you’re looking for. And also it’s security of supply, it’s all those things that you really want in terms of the activity for energy.

I know people are very concerned about, you know, the way that their planet should be used. But at the same time we need energy.

World Finance: It’s not just the energy industry that’s interested in this synthetic gas, it does have other uses?

Rohan Courtney: Well it’s not just power, it’s not just electricity. It’s also used for fertiliser, it’s used for liquid fuels, there’s many other reasons that you use syngas.

“Our job, my job, is to explain it. What we do at Clean Coal is to have public exhibitions, we explain everything we do.”

World Finance: So as you say, oil prices are going up. Your operational costs and your capital costs as well are cheaper. What are the challenges that you face?

Rohan Courtney: Public perception. We’ve lost confidence in government, we’ve lost confidence in energy companies. And so rightly, the man in the street thinks – what are you doing? You know, burning coal underground? Our job, my job, is to explain it. What we do at Clean Coal is to have public exhibitions, we explain everything we do. And why wouldn’t you want to explain? I mean, we don’t do it under people’s houses, that’s a different thing. But it’s quite right that they ask these questions.

World Finance: One of the public perception problems that UCG has is its environmental impact, what do you say to those criticisms?

Rohan Courtney: The CO2 we capture; it stays underground. If it doesn’t stay underground then you can transport it in pipeline elsewhere. So, nothing actually goes into the atmosphere. So, environmentally, you know, the CO2 issue is dealt with, but also, more importantly, all the rubbish – all the ash and toxics and all that stuff – stays underground where it should be. So it’s a pretty clean, it’s a very clean, fuel.

World Finance: And if those perception problems can be overcome, what is the potential for UCG in the UK and around the world?

Rohan Courtney: You know, this is unmineable coal. Unmineable coal around the world is the biggest resource of the world. If you add oil, gas, solar, whatever you name it – put them all together, it still doesn’t get to coal. Unmineable coal. So, there’s no reason why anybody would want to pick a site that’s the wrong site, for example, you just have this great resource.

In the UK, as it happens, we have a huge amount under our land. We have a huge amount under the North Sea, and we have a huge amount under the Irish Sea. So, there’s a lot of potential.

Maybe the potential for energy – if you want to do it that way, in UCG – for hundreds of years.

World Finance: Rohan, thank you very much.

Rohan Courtney: My pleasure.

Dr Alex Otti on banking in Nigeria | Diamond Bank | Video

Posted on by World Finance

“Must do better” was the IMF’s recent verdict on the Nigerian banking system. Many reforms were “highly commendable”, it said, but more still needs to be done to strengthen the central bank’s oversight. Dr Alex Otti, CEO of Nigeria’s Diamond Bank, discusses the challenges for Nigeria’s banking sector, the impact of the country’s dependence on oil, and his hopes for the Nigerian economy.

World Finance: What challenges still remain for Nigeria’s banking sector?

The challenges that we face today are more in line with the socioeconomic challenges that the country faces generally

Dr. Alex Otti: The challenges that we face today are more in line with the socioeconomic challenges that the country faces generally. Here we are talking about power, we are talking about order infrastructure, we are talking about challenges with data capturing, reliable data, that is not that valuable. We also have challenges with the security situation. We have challenges with the very long drawn out judicial process and we also have challenges with the security situation. We have challenges with the re-emergence of challenged-risk assets. That’s bad loads. Even though the establishment of the bad bank, AMCON, helped a great deal in soaking up the bad debts of most of the banks. As things stand today, there are chances that banks are going to face hard times again with respect to very poor quality risk assets.

World Finance: And how does Diamond Bank work to minimise the impact of these challenges?

Dr. Alex Otti: Diamond Bank has always tried to navigate the challenges irrespective of the problems that face them.  One of the ways we’ve done that is, in terms of power, we’ve tried to create alternative sources like the solar and the water, and we power some of our branches without necessarily relying on public power supply or generic generators that are expensive. In terms of security, we try to partner the police and the military to ensure that our branches are secured and that our customers are also secured. In terms of data, data-ing, we, because we play very heavily in the small and medium scale enterprises and in retail banking generally, the importance of data can not be over emphasised, so what we’ve done is to partner other organisations, international organisations, like the IFC and EFInA, to help us generate data and research and analytics that will help us in taking decisions that we believe are reliable so that we can avoid bad loans, creating bad loans. We have also tried to set up a system where we also help entrepreneurs and people who play int he retail segment of the market in terms of training, in terms of providing them with other advice for services, so that’s what we’ve done and we’ve done that well.

Diamond Bank has always tried to navigate the challenges irrespective of the problems that face them

World Finance: Nigeria’s dependence on it’s energy sector leaves it highly vulnerable to oil price volatility. So how are banks protected from this?

Dr. Alex Otti: The only way to go for a bank is to also begin to think of diversification. Because the Nigerian economy itself and the managers of the economy are working very hard towards diversifying the base of the economy and this is more so where our alternative sources have developed by the US and other importers of oil today. So that they have reduced, the importer for US for instance, which used to be the largest importer of oil from Nigeria, has developed a share gas and today India has become the largest importer of oil. So for the banks, looking at funding the other parts of the economy other than oil and gas is one of the ways to protect itself.

World Finance: So the need to diversify the economy is a real one. Which sectors do you see driving this change?

Dr. Alex Otti: Nigeria is blessed with a lot of economic activities, think of agriculture and statistics has it that seventy percent of the population is employed in the agriculture segment of the economy. Even though a large chunk of that is in subsistence level. But then it has manufacturing, there is solid minerals, and transport, power also, there are so many things to find in Nigeria. I think the problem was that oil and gas took it from the oil and gas took a prominent space because of the higher oil prices. So like you rightly said, if oil prices go down then the economy will suffer so banks like ours are looking at all the sectors other than oil and gas.

[I]f oil prices go down then the economy will suffer

World Finance: What is Diamond Bank doing to support these businesses?

Dr. Alex Otti: The loan book of the bank is properly diversified. What we are doing is now to put some energy in supporting the micro and small scale enterprises to reduce the level of unemployment in the country. And also to ensure that the bank is running on on a healthy balance sheet footing.

World Finance: Finally, how do you see the economy developing over the next few years and the vision for Diamond Bank within the economy?

Dr. Alex Otti: The economy has been growing at the rate of over six percent in the last five years so in terms of GDP growth inflation has come down to single digits as of last month and it is believed that it will continue in that frame for the rest of the year. The economy has witnessed foreign revenue of about forty-eight billion dollars and that covers some eleven months of imports so we can safely say that the economy is quite healthy. What is left today is now to link the growth in the economy with developments and that is why we are encouraging support of infrastructure, agriculture, manufacturing, and other areas. So for Diamond Bank we are well positioned to take advantage of the growth that we are expecting to see over the next couple of years. Our strategy is centred on people, and we pride ourselves as having one of the best people in the economy in the bank industry today. And we have strong propositions and processes, technologically driven, that would support the growth that we aspire to see in the next couple of years. So Diamond Bank is very well positioned to take advantage of that and also to support the economy as it grows and becomes one of the power houses by the year 2020.

World Finance: Dr. Otti, Thank You

Dr. Alex Otti: Thank you very much, Nick

Alain Schmid on treasury services | Fides Treasury Services

Posted on by World Finance

Fides Treasury Services is a wholly-owned subsidiary of the Credit Suisse Group, which acts as an intermediary between corporate treasurers and their banks. Alain Schmid, CEO of Fides Treasury Services, discusses the company’s ethos, the services it offers, and the impact initiatives like the Single Euro Payments Area are having on the market.

World Finance: Fides Treasury Services is a wholly-owned subsidiary of Credit Suisse Group, which acts as an intermediary between corporate treasurers and their banks. Here to discuss their company ethos and the services they offer is Alain Schmid. Alain, welcome.

Alain Schmid: Thank you.

World Finance: What kind of challenges do your clients face?

Alain Schmid: It’s important to understand what kind of clients Fides serves. We are targeting the mid- to large-sized corporates, and there are several studies that say 40-50 percent of corporate treasurers work the following way.

When they go into the office, the first task they do is get visibility on their bank accounts. So when they work with 30 banks, they have to log in to 30 internet banking tools. And then they usually use an Excel spreadsheet – they copy and paste the balances into it – and then they have to decide which cashflows have to transfer into which accounts. Then obviously they have to log in to the accounts and tools again.

At the end of the day it’s all about controlling. And you say that these processes are inefficient. It’s also prone to mistakes. And last but not least, from an audit perspective, there’s just too much manual interaction in it.

World Finance: And how can Fides help with these challenges?

Alain Schmid: Our goal at Fides is not just to improve the processes. It’s to render them obsolete. You know, connectivity is what we can do, what we’re best in.

I like to compare it a little bit to Facebook. Facebook is so important, because you have that many friends on Facebook. At Fides, our friends are the banks. We work together with almost 1,500 banks all over the world – and that’s where the leverage for the client comes in too.

World Finance: Tell us the impact that the economic downturn has had on your business.

Alain Schmid: The financial crisis hit almost every institution, all over the world. So in our business there are mostly two strategies. It’s a little bit black-and-white, but: mostly two strategies.

The first one is the one-bank strategy. You work with everything in your core bank, your absolute core bank. So the services are generally very cheap, but they are subsidised by other banking services.

Multi-banking, on the other side, is about risk-aversion, risk-diversification. And the answer provided to your first question shows there is some inefficiency to this multi-banking strategy. But Fides helps to overcome this inefficiency, and make it as efficient as the first strategy – but you can manage your risk.

World Finance: Speaking of efficiency, how do standardisation initiatives like SEPA affect your business model?

Alain Schmid: In theory, SEPA should be a very bad thing for Fides. We should be very unhappy.

Three to five years ago, everybody thought with SEPA there would be just one global – or at least one European – standard. One format in place. And it makes life so much easier for corporate treasurers.

But what we see today is that there are counter-specific flavours in place; as well as the banks, they have their own specifications. And this situation, connected with a regulatory thing, for example – in Europe you have to use SEPA by February 2014 – this combination means a huge business potential for Fides.

World Finance: Why have you decided not to offer a treasury software management tool?

Alain Schmid: As I mentioned before, we are doing what we really do best – and that’s all about connectivity. We work very closely with treasury software management providers, because it’s important to serve our clients on a full scale. And we also have some little software in place – for example, for clients to get first process efficiency gains, on a really first hand. So it’s not at all comparable to a full-fledged treasury software management system.

World Finance: And finally, what principles guide your client relationships?

Alain Schmid: It’s important to understand that a client usually implements the whole operation over several phases. And if you look into one of these phases, which could consist of first of all implementing in European banks, it’s starting with a project. And then it’s going into that project. It’s very important that Fides brings its experience into the project. Because what you usually see – just for one example – is that the project is placed within corporate treasury. And important stakeholders within the company are not involved. For example HR, regarding payments on payrolls, compensation, and also financial accounting. So we bring these topics onto the table.

After the project, you implement the solution. And obviously our relationship managers are very close to the client, to ensure that the services help to meet the goals. But obviously we want to start the second phase, because this means additional business for Fides.

World Finance: Alain, thank you.

Alain Schmid: You’re welcome, thank you as well.

Saruhan Dogan on Turkey’s capital markets | Finansinvest

Posted on by World Finance

Finansinvest was incorporated in 1996, and remains a wholly-owned subsidiary of Finansbank, with its headquarters in Istanbul. One of its board members, Saruhan Dogan, discusses the recent changes in Turkey’s capital markets, the ways that Finansinvest is responding, and the future for investments in Turkey.

World Finance: So how have the capital markets in Turkey evolved over the last few years?

Saruhan Dogan: Well there has been a very significant change. Turkish capital markets have been very equity throughout the last twenty years. That’s basically because we had very high inflation, very high interest rates and debt market growth donate by the government borrowing. But in the last two years inflation and interest rates fell below to single digits. Investors started to look for better returns than treasuries in the fixed income market, and this led to a demand for corporate bonds and our house and our competitors who have been looking for corporates to raise debts in which they were interested switching from bank borrowing to capital markets. And this is creating a new market, a capital market for corporate borrowing which I believe is going to be one of the biggest and most interesting markets in Turkey, and this is going to be leading to a significant shift in short term corporate working capital borrowing. Shifting from plain vanilla bank short term loans to one to three maybe up to five years Lira corporate bonds, which is going to be a very interesting opportunity for us.

I believe is going to be one of the biggest and most interesting markets in Turkey

World Finance: These changes that have happened in the last two years. How important are they?

Saruhan Dogan: Well, they have been very important because first of all as investment banks this is really shifting our focus and our social P&L. Furthermore, equity markets have been working well in Turkey, but they also have been very volatile and our local investors, especially, have suffered from this volatility a lot. Fixed income offers a much less volatile and certain return, which our investors have so far been very happy with. So I believe that this is going to be very important new door opening for Turkish capital markets.

World Finance: So how did Finansinvest respond and position itself throughout these changes?

Saruhan Dogan: Well, they’ve been lucky enough because in 2012 we had two major deals. We’ve done the live ceremony of the year and we’ve done the largest capital market shares action in the history of our capital markets which was the secondary public offering of Halkbank, one of the very large public banks. But throughout the year our main focus has been in the dept markets and we’ve been pitching lines to raise debts in different forms and it’s been a very successful year so yes we’re still working a lot on additional products, M&A and IPOs but our focus now is definitely on the debt markets because banks are under pressure; capital, liquidity, risk. So, we believe that they will be pulling out of our less lucrative markets which is first to fall, the short term corporate landing market. This is going to be creating further opportunities for us because we will be replacing what the, sort of, the fields they are living free. So our focus has been the debt markets.

[O]ur focus now is definitely on the debt markets because banks are under pressure

World Finance: Now 2012 was a successful year for your. Talk us through some of the developments at the bank.

Saruhan Dogan: We are a very consumer retail oriented institution. Furthermore as we grow up we also focussed on SMEs. For capital markets our perspective is definitely to grow on smaller climbs. As we go smaller, you need to be a more sophisticated house, you need to have more man power to handle larger amount of tickets for smaller size but larger amounts. And that’s where our institution have been focussing as for Finansbank, now, my intention is to be one of the three largest banking institutions in Turkey by 2020. Hopefully we’ll be there. We are trying to catch up to our competition who traditionally have been larger than we are, but with our focus on the SME and commercial clients, we believe we will be there.

World Finance: So you mention your strategic vision there, also how do you see the Turkish market evolving over the next few years?

Saruhan Dogan: Next couple of years are not going to be very easy for Turkish markets, and definitely not the capital markets. Global liquidity is going to definitely be an issue and we are entering a period of elections and politics have been traditionally significant noise in Turkish markets. So the uncertainty about what’s going to happen in the political area is going to be one factor added to the uncertainties of what is going to happen to the global economic environment and sentiment. It’s not going to be easy but this is always an opportunity for us because as times get rougher clients will need more sophisticated support from their investment banks and we believe that we are well positioned to serve them. We are currently nesting because we believe that when times are tougher, it’s going to be a much less easy to go to our bank and borrow whatever you can but you will need to be more sophisticated to be able to protect yourself from the volatility in the market and to access the liquidity you need to run a business.

Next couple of years are not going to be very easy for Turkish markets

World Finance: So in the context of the global macro environment there are still opportunities?

Saruhan Dogan: It is going to be a difficult time, but you can’t just sit down and say it’s going to be difficult what are we going to do? I believe that all difficult times present significant opportunities in Turkey and FInansbank was set up in 1987, as a sort of one floor twenty-four people small bank, and now we are the fifth largest private bank in Turkey. Because we’ve managed to benefit from opportunities and Turkey presented lots of opportunities because we had many crisis. Once again we believe that we are well geared and prepared to be with our clients during these difficult days because I don’t think there is any way out of it. We are going to have a difficult time. Turkey has been one of the countries who benefited most from the abundance of liquidity in the last couple of years which also means that when liquidity goes away, we are going to be suffering. Times will be tough, but tough times call for good partnership between banks and their clients.

World Finance: Saruhan Dogan, Thank you

Saruhan Dogan: Thank you, Nick

Conor McEnroy on banking in Latin America | Sudameris

Posted on by World Finance

Sudameris Bank was acquired by the Abbeyfield Group in 2004, and is now the fifth-largest bank in Paraguay. With a specialism in restructuring banks post-systemic crisis, CEO Conor McEnroy shares his view on banking in Latin America: the challenges for banks, the differences between the LatAm and European models, and the outlook for Paraguay’s economy.

World Finance: So, first, tell us about your background and how you got started in banking?

Conor McEnroy: I started work for Swiss Bank Corporation which was my Alma Mater. I worked for them in all for twelve years. Wonderful training ground, comprehensive training, worked on the tutor and the mentor system and I worked with them in London, in Milan and in New York. Specifically on repairing broken banks, that experience is based out of South America. So for ten years post hyper inflation in South America banks die. They die what’s called the death of a thousand cuts, and you have to go in deep and cut almost to the bone to repair them. That’s what I did first bank by bank, and then finally system by system.

They die what’s called the death of a thousand cuts, and you have to go in deep and cut almost to the bone to repair them

World Finance: So tell us what initially drew you to Sudameris bank?

Conor McEnroy: If you frequent broken banks often enough eventually, especially if you’ve got demonstrated ability to repair them and bring them back to life, you are in clear and present danger of being offered one. I was called one day by the Union bank of Switzerland, and they told me that they had pre-screened me with Bank Intensa San Paolo in Italy, and they offered me Sudameris, which was a delicate, difficult case. At first I was a little sceptical but I went and did a due diligence. I made them an offer and they accepted.

World Finance: You’ve talked briefly about your experience of restructuring banks. Perhaps you can expand a bit on that and what experience you’ve gained?

Conor McEnroy: Key issues would be self regulation does not work. I’ll say it again, self regulation does not work. And secondly, history repeats itself; there’s always another generation ready to come and make the same mistakes as the previous generation. You have to remember, what is the purpose of a bank? What is the role of a bank in society? In the first instance, it is a safe place for you to deposit your money. There is no human right, and there is no civil right, of access to credit. You have no god given right or man given right to my money. I will lend it to you if I choose but you have no right to it. So the first responsibility and activity of a bank is not to lend money. It’s to provide a safe place for a deposit and you lend money within that context. It’s easy to lend money, it’s hard to raise deposits.

There is no human right, and there is no civil right, of access to credit

World Finance: On that theme of banking models, you’re based in Latin America. How do banks there differ from those in Europe?

Conor McEnroy: The key difference is that banks in South America are traditional, if you permit a joke, they’re the three-six-three. Pay three, lend at six, go and play golf at three o’clock. Old fashioned banking, plain vanilla banking. I believe that the downfall of banking as it’s known in Europe and the United states is driven by the issue of regulation, in particular, commercial banks being allowed to play investment bank, and investment banks being allowed to play commercial bank. And secondly, I think the great social ill that we have is the credit card, and the use that credit cards have been put to.

World Finance: And if we look at the policies being put forward by the FED and the ECB in the US and Europe. What impact is that having on the economic landscape?

Conor McEnroy: Well, whilst the banking environment in Europe and the United States are practicing this low interest rate environment, primarily to help the banks and ergo their clients since they were having a crisis along with the banks. It has a knock on effect in South America, where we don’t have these solvency issues and we’re getting a holiday. So suddenly our yields are a little bit higher than Europe or the United States so we suddenly become very attractive, we can access long term money and so we’re on a little bit of a boom in terms of development capital. Building factories, building infrastructure, at very cheap historic rates for us.

Paraguay is coming from a low base, it’s very rich country in terms of assets, natural assets and so on

World Finance: And this boom has been recognised in a recent study which puts Paraguay as the fifth fastest growing economy in the world. Do you think the growth can be sustained?

Conor McEnroy: Paraguay is coming from a low base, it’s very rich country in terms of assets, natural assets and so on. It’s a country that’s putting itself in order and having all the benefit and high growth figures that come with putting your house in order. I can certainly see it for another ten-fifteen years. I would even say thirty.

World Finance: Conor, thank you

Conor McEnroy: Thank you very much

Fathi Ben Grira on Middle East investments | MENACORP

Posted on by World Finance

The Middle East and North Africa is a region of huge growth right now, with booming businesses and massive state investment. MENACORP is an investment bank specialising in the MENA region, and its CEO Fathi Ben Grira discusses the opportunities in the area, how MENACORP became the leader in stockbrokerage in the UAE, and the bullish outlook for the UAE market.

World Finance: MENACORP is based in the UAE so why is this a strategically important location?

Fathi Ben Grira: As you just said, we cover the whole Middle East and North Africa region, that’s why our company is called MENACORP. MENA standing for Middle East and North Africa. Some of our competitors chose to cover the region through Qatar, Bahrain or Egypt. These are great places to run the business, but we believe that the UAE gives us a really competitive edge compared to the other countries. First, political stability. In the region you can’t ignore the importance of this factor. Second, economical growth. With a huge wealth of the emirate of Abu Dhabi and so that strong dynamic of the economy in Dubai, that’s really the right place to be. Third, geographical position. We are at the crossroads of some of the fastest growing economies in the world and at the centre of the oil and gas reach GCC and also when I find myself at the Dubai airport, I really have the feeling to get the centre of the world, or at least the centre of the new world.

World Finance: Now you’re stock brokerage division has been enjoying remarkable results, tell us why you are a leader in this field in the UAE.

Fathi Ben Grira: In UAE, you have fifty stock brokerage forms operating on the Dubai financial market and the Abu Dhabi security exchange. So roughly you should take fifty companies each of them should have their own two percent market shares. We are far above those figures since we reached fifteen percent market share on the Dubai financial market, and eleven percent market share on the Abu Dhabi securities exchange in terms of trading value. So this brings us to the first place in terms of trading value, but also in terms of size of clients portfolio where we crossed one billion dollars. All that has been achieved thanks to the dedication of our team. We have the largest sales team in the country led by our managing director of brokerage, Mr. Nabil Al Rantisi who did an amazing job during, since he joined our company. But also thanks to the back of his finance department and IT department, strong sales force, state of the art risk management, and proper execution, that’s how we run the business and that’s why we are the number one in UAE.

World Finance: You also have other business lines including investment banking. Tell us about your focus for the next few years?

Fathi Ben Grira: The first thing we will focus on our brokerage activity to offer more products to our clients such as Forex commodities, international trading, we will cover all the markets of the MENA region to offer one single entry point on all those products. The second thing we will strengthen our practice in asset management in our case I should speak more about wealth management since our clients are mostly high net worth individuals based in the GCC. Third, investment banking, traditionally many mandates, but we will also have a strong focus on IPOs as we see a huge trend for the coming years in the UAE, especially for family owned business. And we know from the discussions we have with the market authorities with the regulators that soon they will issue a new set of regulations easing the listing rules for those family owned businesses. Finally our financial research, we focus on two page document with a lot of data, with a lot of financial ratios, and since now we cover one hundred percent of the listed companies on the MENA region, I guess our clients are happy with it.

World Finance: Several international investment banks are also based in the UAE and specifically Dubai, so how do you complete with the established names?

Fathi Ben Grira: You are right, most of them are based in the offshore zone of the Dubai international financial centre, so which means that from a legal point of view they have the statues of foreign companies. They are not an on shore company. We are an on shore company, we are one hundred percent Emirate, regulated by the local authorities so for me it’s a substantial difference, but let’s get things clear we are not here to compete against Morgan Stanley, Bank of America or HSBC, we operate on different fields, most of the time we try to cooperate with these international financial institutions each time they need a local partner to operate on shore.

World Finance: Finally, what is your outlook for the UAE economy and your role within it?

Fathi Ben Grira: I’m extremely bullish on the UAE economy. The country is doing great under the guidance of Sheikh Khalifa bin Zayed Al Nahyan who launched the vision 2030 for Abu Dhabi. The emirate of Abu Dhabi engaged huge government spendings in terms of investment infrastructures in order to totally transform the economy of the Emirate. On the Dubai side, Dubai, the city is a beacon for the whole Middle Eastern North Africa region but we know that when you leave the ambition of his highness Sheikh Mohammed bin Rashid Al Maktoum is not limited to the region. With the bid of Dubai to be the city hosting the expo 2020, his ambition is really to bring the city and the whole country, to the forefront of the international scene. And at MENACORP we are proud to be an official bid supporter for Dubai 2020. Our job is to support the vision of the leaders of the country and to make it really international financial platform, is to provide the best service we can to these institutions for their execution needs and also to promote each time we can, the country as a major financial centre.

World Finance: Fathi, Thank You

Fathi Ben Grira: Thank You.

Dennis Uy on Philippines oil | Phoenix Petroleum | Video

Posted on by World Finance

Dennis Uy founded Phoenix Petroleum in 2002. Since then, it’s grown to be the number one independent oil company in the Philippines – and one of he nation’s leading brands. He talks about the business opportunities presented by the Philippines’ 1998 Oil Deregulation Law, the development of Phoenix Petroleum, and the future opportunities for the oil industry in the Philippines.

World Finance: Let’s start with that initial decision to establish Phoenix Petroleum: how important was the oil deregulation law, passed in 1998, in convincing you there was a real business opportunity?

Dennis Uy: Well, the oil deregulation law paved the way for the birth of Phoenix. Without it we wouldn’t be here! The decision was very simple. The industry used to be dominated by three companies, and when you open up an industry where it was dominated by only three companies, there’s really a big chance for us to get market share.

“It’s always our service and our people that are a distinct advantage”

World Finance: Phoenix Petroleum began life in the southern island of Mindanao, not like many other companies here in the capital Manila. So what challenges has that presented for you, and how have you overcome those challenges?

Dennis Uy: For us to start in the southern part of the Philippines was not by choice, it was by chance. It was just that I do my business there, I was born there.

We started there, and luckily we were able to expand nationwide. It’s always a challenge, even until now, to gain brand acceptability. For the past five years, since we expanded outside Davao, our brand and our stations have been gaining acceptability, and we thank our consumers – our customers – for that.

But every day is a challenge, to improve our brand and our service. It should be acceptable to all.

World Finance: So what have been the core products and services that have set you apart from other companies, other competitors, as you’ve grown?

Dennis Uy: The petroleum industry that we’re in, it’s a commodity. That makes our products no different from our competitors: it’s always our service and our people that are a distinct advantage. As the saying goes, our people are our greatest advantage. The people and the culture of the company is what sets us apart from all the others.

World Finance: Looking ahead, what are your future plans for Phoenix Petroleum?

We hope to sustain the growth that we’ve been experiencing in the past five years, of at least 15 percent per year. The next five years should be a period of growth – maybe a bigger market share, more stations: going from 300 to at least 500. And of course, having a more established brand, and a stronger company, balance-sheet wise.

“Other Asian countries have three or five times more stations per capita: there’s a lot of room for growth”

World Finance: Let’s look at the wider picture: what are the opportunities for the oil sector here in the Philippines?

Dennis Uy: We are into retail and commercial distribution, so in terms of retail there’s a lot of potential. In the industry there’s only 4,600 stations, compared to other Asian countries who have three or five times more stations per capita. So, there’s a lot of room for growth.

We’ve been regulated for the past 25 years, and as you said, in 1998 the industry was opened to everybody. So it’s only 15 years since it was deregulated, and close to 2,000 stations were opened during those 15 years. So the next 15 years should see more stations opened, to the convenience of motorists.

World Finance: Finally, what’s your assessment of the Philippines as a destination for global investors? What should people be looking for here?

Dennis Uy: As the saying goes, it’s more fun here in the Philippines to invest. The country has been upgraded to investment grade, and I think our president has done a good job in promoting and laying the groundwork for at least a level playing-field for all investors. We have a population of 100 million, and growing: a big market. So, it’s time for people to invest and companies to invest here.

World Finance: Dennis Uy, thank you

Dennis Uy: Thank you.